iBeacon: How much privacy would you give up for a coupon?

Just in time for the holiday shopping season: a new way for retailers to track and target customers.

Late last week, Apple enabled its iBeacon technology in 254 of its U.S. retail stores. Pick your buzzword: location-aware services, context-aware computing, Internet of Things. That's where this is headed.

Essentially, an iBeacon is a small wireless transmitter that sends out a unique radio signal.

"Imagine you're a ship. iBeacons are lighthouses," explains Jeffrey Dungen, a Montreal-based engineer and entrepreneur who has worked with the technology.

"The iBeacons are just sending out a radio beam - much like the light beam of a lighthouse - which is uniquely identifiable."

Compatible smartphones can detect these signals and use them to better understand what's nearby. When paired with a store's own smartphone app, very precise targeting becomes possible.

"The location accuracy is much more on a human scale," says Dungen. "It's not necessarily, 'I'm in a building.' It can be 'I'm in a building in a specific room' or 'I'm on a specific floor.' It's much more precise than just GPS alone indoors."

Many uses

Despite the name, iBeacons are not Apple-exclusive. The underlying technology relies on the latest flavour of Bluetooth. So long as a device supports Bluetooth 4.0 (as many iOS and Android devices do), it can theoretically support iBeacons.

What's more, a number of third-party companies build and sell the iBeacons themselves. Retail environments are a natural fit, and that's where a lot of the focus has been.

However, it's not difficult to imagine other applications.

For instance, museums. You walk by a display, and an iBeacon notifies your smartphone that there's additional information about whatever's in front of you.

Or publishing. A UK company called Exact Editions has used iBeacons to give away free access to digital soccer magazines. The catch? They're only free when your smartphone is within range of an iBeacon that happens to be at a bar. Once you're out of range, the free access disappears.

Major League Baseball has said it plans to use iBeacons in its stadiums, alongside the MLB's "At the Ballpark" app. Walk into a stadium, and the app welcomes you. Walk past a concession stand, and receive a coupon. You get the idea.

Consumer appeal

The advantages for retailers are pretty clear. But as a consumer, why would I opt into this?

"It's very simple," says Jeffrey Dungen. "You, as a customer, will only opt in if you know you are getting a better experience. You might receive coupons, or it could be faster checkout. But there has to be a better customer experience. Otherwise, people will not use it."

Indeed, many of us are suckers for coupons. Often, we're willing to be tracked and targeted, if it means saving a few bucks.

While much has been made of the potentially creepy or annoying uses of iBeacon, it's important to note that iBeacons themselves aren't tracking anybody. Again, they're like lighthouses, simply broadcasting a signal.

And because most iBeacon implementations rely on a companion smartphone app that must be granted permission to use location services, there's an "opt-in" of sorts.

However, Dungen says that integration opens up potential for tracking. If you have Bluetooth turned on, and you've opted into an iBeacon-enabled app, nearby iBeacons can trigger your smartphone to go online.

"Your phone has to be connected to the internet in order for the content from the iBeacon to show up on your phone."

That's where the potential to be tracked comes in. If a nearby iBeacon triggers the download of a coupon, suddenly, there's a link between the coupon, your phone, and exactly where you were standing the store when you triggered it all.

For the privacy-conscious, that level of precise targeting and tracking may be troubling.

But, on the upside … coupons.